tv Bloomberg Markets Bloomberg May 19, 2016 10:00am-11:01am EDT
betty: we will take you from new york to london to paris and tower. bayer aims to dominate the feed industry making an unsolicited it for monsanto which is a market value of $42 billion. shares of bayer are plunging on concerns that such a large purchase could weigh on their credit rating. mark: the latest on the investigation into a missing egyptair jet. it was en route to cairo from paris with 66 people on board when it disappeared from radar over the mediterranean sea. betty: walmart is bucking the retail trend. the shares are surging after its first-quarter results beat estimates providing a note of optimism after week numbers by
target and macy's. let's go straight to the markets desk and julie hyman. it's a pretty sharp decline. we have a raised all the gains. it's interesting that this is happening because yesterday after the fed minutes came out, there did not seem to be much of a negative reaction to the increasing perception we would see perhaps an increase in rates in june or july. now we are seeing an acceleration and the clients since the opening bell this morning. stock losses have about doubled as we have gotten out of the gate. this is what is declining the most. the groups in the s&p 500 are lower with the exception of consumer staples, thank you walmart. otherwise telecom stocks in energy and oil prices. that is part of the reason we are seeing the sell off is oil prices are off by about 2%. we got week supply data coming out yesterday.
industrials and financials and tech, it's a broad taste selloff. would be the bright spot and that's the reason consumer staples are higher. that's dockets having its biggest one-day gain going back to 2008 after its numbers beat estimates. same-store sales were up 1% and target same-store sales were up 1.2% but they missed estimates. it's all about expectations. target is not going higher along with walmart. costco is recovering a little. bayerng on the stocks of and monsanto -- monsanto has a $42 billion market cap and the companies are not disclosing the terms of this deal. analysts are concerned about whatbayer will have to do to finance a potential deal and that's why you see the shares down so sharply. betty: on the fed talk, jeff
rates.talked about fed what kind of reaction are we seeing question julie: it's a similar reaction more or less to what we saw yesterday. looking at the u.s. dollar, there is a him today but not huge. of this in be more the 10 year likewise. it was rising earlier but it has turned lower which is a reversal. theve been watching wirp, changing expectations for a potential rise in interest rates in june went up sharply yesterday. today is not changing much. it is a changing paradigm for when the fed might raise rates. paradigm ishanging sending shares in europe lower. the stoxx 600 is down by 1% and the only industry group that is rising is the bank industry, up about 1/3 of 1%.
you'll notice travel and leisure is down by 1% after the disappearance of that egypt air jet over the mediterranean which leads to shares of the tour operator in europe where shares have sunk as much as 20% because of the disappearance of this jet over the mediterranean but also it announced it to announcement that said bookings for the summer are down 5% and demand is turkish holidays significantly below last year's level. they should be in the lower end of estimates this year. big m&a today. a houston company agreed to merge in an all stock deal. it's a $13 billion merger.
sterling is rising for the fourth consecutive day against the euro. poundste line is euro -- so the euro peaked in april. since then, it has fallen by 5%. implied volatility, the expectation for volatility in the next few months has also come down from six year highs on monday. we have had at better than expected retail sales rate it. it's about these polls which remaint looks like the camp might be successful but it's too early to call it, five weeks to go. who knows? we will find out soon enough to let's get to first word news. are getting more details from greece about the
final moments of that missing egyptair flight. wentrities say the plane left and then right before plunging and falling off the radar. flight 804 was at 37,000 feet over the mediterranean and about 170 miles from the egyptian coast when it disappeared. carrying 56320 was passengers and 10 crewmembers. there is no distress call and the egyptian prime minister has refused to rule out terrorism. the iraq he defense ministry has released footage showing aircraft donning islamic state targets in the northern and western districts. iraqi forces said they have liberated one of the districts in anbar. tensions between the u.s. and china over disputed international waters. 2 chinese fighter jets intercepted an american reconnaissance plane over the south china seas. the chinese jets came within 50 feet of the u.s. plane, forcing
the pilot to do send a couple of hundred feet. obamacare rates are going up and health insurers are among those seeking rate increases. they want to raise the amount customers pay for individual health care plans by an average of 17%. the sticker shock could cause political problems for the law and its supporters. global news, 24 hours a day, inered air 2400 journalists, more than 150 news bureaus around the world. mark: let's get back to the disappearance of the egypt airplane that was headed to cairo from paris. we go to our paris euro. what are we hearing from authorities? >> from the french authorities and the egyptian at doherty's, the message is the same in that nothing can be ruled out meaning it could be technical or it could be terrorism or it could areabe a bomb from paris
the plane took off at 11:00 p.m. the plane actually did three different routes in europe in the past 24 hours. from the egyptian aviation minister, he said the evenbility of terrorism is higher than the technical engines felllane at the same time. if it was mechanical earlier, it could still have glided for a few minutes. the french president gathered his ministers for an emergency meeting and said there is nothing that can be ruled out. no hypotheses are being ruled out. nothing is favored. i have put in a call to coordinate with greek and egyptian authorities.
the truth andd when we know the truth, we will draw all the conclusions. even though there are certainly several scenarios and i want to focus on the technical one or it lets focused on the aircraft. what do we know about this particular model? 320 is about 30 years old. it's a very popular airplane. you have capacity of 115 passengers on board. flying all over the globe at the moment. there is even more coming out because airbus has had more than 12,000 orders. in the past 30 years, there have
been 12 crashes. we remember the russian metro jet that was shot down allegedly by the islamic's date last over. mark: thank you so much. we will continue to follow this story. still ahead, the fed puts the june rate hike on the table. a swedish money manager tells us why he is dumping the u.s. and heading east. ♪
betty: i am betty liu and you're watching bloomberg markets. theypril said minutes says are leaving the door open for a june rate hike. early, jeff lacker said investors misread the fed intentions. was thatinterpretation the threshold we have for what it takes to get us to pause in the rate increase is that in december, we outlined and expected to see this year was fairly low. i think they set it too low. overestimate how likely we were to pause for the rest of the year. betty: as the fed sounds the alarm on imminent rate hike him our next guest says he is jumping risk and fleeing u.s. stocks are looking east to asia. joining us now from stockholm is hans peterson, global head of asset allocation at seb bank
which is $96 billion under asset management. is it overblown to say you are fleeing u.s. stocks? >> that's putting it a bit aggressively. we are decreasing a little bit but we still hold u.s. stocks. we are moving toward europe and the little bit of asia. are you decreasing or equity holdings? the fed will hike the interest rates. secondly, margins are going a little that lower in the u.s.. in that european area it's quite high. it makes us less motivated to hold u.s. equities right now. we have decreased a bit. the fed minutes were the
big macro story. have you changed your view on how many hikes you think will come from the fed? i think you're going for one in the autumn. have you changed your outlook? easy to jump's around in those estimations. they are trying to signal something. we have to take that into account. the important thing is that they are hiking. the pace of the hikes will commodity values and asset values. the pace is an open question. mark: give us more of the thinking when it comes to going east and going to asia and europe. where are the best opportunities in europe right now? had decent evaluations in
u.k. if it's a tricky outcome. that will require cautiousness. we have five weeks left so there will be back and forth in the numbers most likely. until get theme answer but there is a lovely some discount at that point in assets. and european note, i wantedck to get back to the head and continue that line of. i wanted to show our viewers this function on our bloomberg. it shows you where the fed fund and that istrading an outlook on where traders think they see interest rates headed. only a week ago, we were near zero chance for a june rate hike and now it's up to 28%. that is the majority opinion. does that seem overly optimistic? does that sound about right to >> the markets are always right at some point. the important question is how the hike the? levels, itbond should not be too aggressive. they have limited room to hide. they don't have to be too long-term so the effect might be [indiscernible] thank you so much. it's time for the bloomberg business flash. fiat chrysler is recalling half wranglersjeep worldwide because the driver airbag may not in late in a crash. it covers wranglers from the 2007-2010 model years. chrysler says is not aware of related injuries. the sec says pro golfer phil made $931,000 in insider trading case. been named a relief defendant but is not accused of a crime. the sec says it wants a return on his profits. involves tom davis and a las vegas gambler and both have been charged with insider trading. that is your bloomberg business flash. mark: still ahead, we were first to a week ago and now it's official -- bayer is making a biggest monsanto, the supplier of farm chemicals, all the details are next. ♪
the largest supplier of firm chemicals. news of the potential takeover was reported by bloomberg news a week ago. of desperation or defensiveness? what's the rationale behind this bid?licited did question >> we saw it deals we have been talking about for months. we saw a dallas/dupont merge. the remaining players were asking what we do. but theywanted to buy went from the hunter to the hunted. this is a gutsy move. mark: the shares are lower which says it is gusty. is it over fears of a credit rating? >> i think it's a combination things. they are worried that there has to be a big capital raising to
make such a purchase. if you look at the history of german deals, it's the biggest acquisition by a german company of all time and that shows they will have to take on a lot of debt and equity and it's a got the move in terms of regulatory scrutiny and political backlash in germany. when the story was originally published a week ago, people were shocked so when we saw the bed last night, we felt vindicated and relieved. the shareholders are showing that they have the guts to make this move. betty: it sounds like so many hurdles. why do they need this so badly questio? thehey are looking at rivals merging and they see this as bayer chemicals with the seed business of monsanto. there is not a lot of overlap and they fit nicely. they say this would make them one of one or two major players for the next 100 years in that space which could generate a lot of profit. mark: if we look at this lovely
chart, when you look at the big players in that space, three entities have 80% of the market. surely, regulators will have issue with that. >> that is a logical and expect tatian. the only difference is in terms of the areas that the two companies are strong in, they are quite different. there is not a lot of overlap. they are almost third in line in terms of the regulatory line. dupont and then syngenta but will regulators let them all go through? why is the oil services deal so big? >> it's all about crude prices. these providers have been seeing their orders going down. they need to cut costs.
by combining, the projected $400 million in savings. if they can ride the low by cutting costss, they can rebound down the load as a company together. mark: i keep trying to get rid but he keeps coming back with more deals. betty: he is hoping we will keep seeing him. still ahead, walmart is reporting better than estimated results. that thebe a sign retail slump is overblown? we will find out. ♪
let's get to our first word news. kayla? a two-month extension of the state of emergency has been approved after the attacks in paris covering the european championship soccer tournament in the tour de france. police have been given more power to make arrests and restricted the movement of or vehicles. iran launching an offensive aimed at the iranian financial elite. they are in london meeting with european counterparts trying to break a deadlock in investments caused by a few remaining u.s. sanctions. fled ina, residents who oil town ravaged by wildfires will probably be able to return in a couple of weeks. more than 80,000 people were evacuated from fort mcmurray. the wildfire has cost the oil industry one million barrels a day in production.
moody's has cut its forecast for the economy. the outlook calls for the economy to grow down from a 2% to 3% range. they blame a week first quarter. they expect the fed to raise interest rates twice at most. anothermonth temperature record broken. the earth experienced its hottest april in 137 years. it was the 12th straight year that set a new heat mark. chance a better than 99% that 2016 will be the hottest year ever recorded. global news, 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus around the world. start in asia with the nikkei, the hank shen, and the shanghai composite. they were almost all lower. fluctuated and ended
flat. dragged lower by commodity shares and the fed outlook. chinese stocks may draw to the lowest level in two months. higherose concerns of u.s. interest rates that will hurt the earnings outlooks for airlines and property developers in china. how is it looking? fed, we are all about the all about the minutes. thinking clearly that june is very much a live meeting. that certainly shifted sentiment . all of the major forces are in the red today. added factor of this overnight disappearance of the egyptair airbus eight 320 over the mediterranean sea that is weighing on the travel and tourism industry. let me show you some of the group declining led by thomas cook. by 5%. banks are up on the day of
deutsche bank's annual shareholder meeting. matt miller is eager to talk to us about that. in chemicals, it is about the bayerial they are due -- deal. basic resources are declining, but the dollar is rising. the sterling is against the dollar for the fourth day. the euro is down against the pound. good one if you look at where sterling was against the euro last month and against the dollar in february. there seems to be more certainty that the account might be victorious -- of the remain count might be victorious in the hope of staying in the eu. with five weeks to go, it would be a full -- a foolish man to say the referendum is over. abigail doolittle has the latest from the nasdaq in midtown manhattan. what do you have? : cisco systems
having its best today in three months. they did beat first-quarter earnings. they offered a better than expected revenue guide for the third quarter driven by the company's shift into new businesses like software-based networking. ceo chuck robbins said investments over the last few years are starting to pay off. the street is bullish, including oppenheimer which is saying that cisco is in a class of its own. troy jensen is saying that cisco is to be bought after the third quarter results mark. mark: stocks are soaring, the analysts are bullish, what does it mean? abigail: not much. cisco shares are caught in a descending range between buyers
and sellers. or $30 per share. the lower highs say the sellers are slightly in control of the battle between the bulls and the bears. we see the stock hitting up toward the selling rusher, resistant to wear the sellers are. the buyers will have their work cut out. the convention has to increase, otherwise the ongoing battle is likely to continue in the shares of cisco systems. mark: great stuff. abigail doolittle at the nasdaq. betty, let's do walmart. betty: walmart shares are rising after the world's largest retailer reported first-quarter results that beat estimates on the heels of disappointing numbers from target and macy's. it suggests in the retail sector , they may be over the bump. joining us from st. petersburg, florida is the consumer analyst
at raymond james with a strong buy recommendation on walmart. what is going on? is this a walmart situation? after seeingried some of the department stores and their numbers? might have missed mentioning home depot and lowe's also comparable store sales as well. i think the issue with walmart is that a lot of work has been done and is being done at to improve the customer's experience in the u.s. stores and internationally. some of that is gaining traction . you see that when you walk into the walmart stores. they have made investments in people and technology. that is having impact. to customers gores continue rise for walmart and the walmart u.s. stores. the customer scores continue
to rise for walmart and the walmart u.s. stores. 1% is not huge, but in the case of walmart, it is a big number. traffic is up 1.5%, a very sizable number. food deflation, responsible for 55 percent of the business, 60 basis points in the quarter. that is an impressive quarter for walmart for sure. it is, but it adds to the mystery as to what goes on with the american consumer. shop atre willing to walmart and home depot, why are they not willing to shop at macy's? budd: i'm not going to comment on any other retailer because i don't cover them. i will say you have to make the customer experience good or you don't have a business. there is a lot of shifting sands in that consumer world with e-commerce. e-commerce has been responsible
for a large portion of the growth in retail. the numbers that we do in the first quarter, first calendar quarter, it looked like e-commerce was responsible for 30%. the walmart e-commerce business is not growing as fast as they want. that is an area of opportunity that they are investing in. they are happy with our which is platform, called pin jihad. even though the overall -- which .s called pangaea even know the overall market marketis slowing -- growth is not growing as fast as international. mark: we have competition from the discounters, aldi. how are they tackling the tough u.k. market? budd: they have a project renewal in the u.k.
the results that we have seen share in the u.k. down 90 basis points in 12 weeks through the .iddle of april from 69 to 16% which is for the walmart u.k. business. that is a challenge and remains a pressure business. it has been fierce competition, and that is likely to remain. walmart never shies away from competition. that is what they are about, and they will continue to work at it . we will see if that does not gain more traction. mark: we have a function on the bloomberg called amr that shows analysts what they are saying about each stock. you are at the top with the highest target price, $80. it isn't looking too bad today with the shares up by 7% or 8%, but it is the most will wish target price. you have a strong buy recommendation. are you comfortable with that
recommendation? comfortable. feel frankly, that is what we are paid to do. you put ourselves at risk. we upgraded the stock after the annual shareholders meeting last year. we are sitting with a little bit of egg on our face for a while. theave a lot of faith in company. i think doug mcmillon in the u.s. in particular are trying to do the right things to get customers turned around. lombardsnto a lot of over time and have been impressed with what i have seen in the stores. particularly in the fresh area. that has been a hot button for dog. it looks better -- hot button for doug. it looks better. neighborhood of markets, which is the growth format of smaller stores, they were up 7% in the quarter, a consistent performance with what we have
seen over the last seven years. it is operating well. they have work to do in the neighborhood market to get that were met to where they want it. mark: great to see you. you have breaking news, more m&a . can we deal with anymore? intimate not be happening. the maker of armand hammer products. the shares rose by 8% and are halted because the company said they have not received any kind of buyout proposal. they say they are not engaged in discussions nor received any proposal concerning a potential bid for the company. why are they making this comment? a website reported yesterday that procter & gamble might be interested in acquiring the company. then a london company, then it might be $23 billion. the market cap is $13 billion. analysts said that sounds too
syntax. a former bank of america executive. cofounder ofeck ellevest, which just launched last week. sallie: that is why i look tired. betty: i imagine it has been an exciting but long road. i will ask you about ellevest in a moment. , is whole centre court world hear it is about to implode. what are you hearing? sallie: you will have ups and downs. they will often he by what the markets are doing. this is a long way. thinking and financial services are technology. of course making it more technologically intensive is a long way. it means employment could go down over time. now, you are disrupting
the banking world yourself with ellevest, tell me what it is. a robo advisor? sallie: a digital investment .latform targeted to women why? because we have a gender investing gap. women do not invest in the same extent that men do. it could cost them thousands of dollars over the course of a lifetime. we have lots of great financial advisors. i know a ton of them. the truth is that we have a gender investing gap. something needs to change. we need to better serve women could not market to them, serve them. mark: what happens if wealth managers crowd into the space question mark how competitive will this space become? sallie: i hope they do. the truth is i'm not the one who woke up and said women have i've
trillion dollars of investable assets in the united states. for a long time every wealth management arm has had a woman's initiative. the problem is "how do we market to women? " what we are doing is trying to serve women better. how exciting. how excited are you about the upcoming election? should wall street be quivering in its boots at the thought of a trump presidency? sallie: i am not a politician, i kittle out of the way of those questions. there's a certain a lot of nervousness about what will happen until it works itself out. betty: i wanted to ask you because of your long career on wall street and your continued talk and branding on women and
gender equality, there was a lawsuit filed by a woman managing director at bank of america that accused the bank of creating a bro culture that paid her 3.5 times less than her counterpart. sallie: i don't know the specifics. we know there is a gender pay gap in this country. in financialap services is greater than average. in the wealth management business that is overwhelmingly male. financial advisors are 86% male. as a result, it is my hypothesis that is why the gender investing gap exists. the guys lose their mail clients at a single digit rate per year. when the husband dies the wife leaves at 70% p year. i care about the pay gap very much. i care more about the women who
are not investing, because they are not being served as well as they would like. betty: we had the bloomberg a index come out and show who were in top paid executives publicly listed companies. the top one -- no one from finance. the oracle ceo crew left wall street to go to tech. to make as much? what is the future for women after getting higher pay on wall street? do they have to go to the tech world? do they have to do something else? sallie: sometimes i see my tech women friends, and they make wall street looked averse. women do not get the same startings men do when businesses. i know there is research showing that a phone woman wants to close her personal pay gap, taking courses in tech and coding can help. betty: great to see you. good luck on your launch.
>> that is the holy grail for vintage rolex fans. one of 12 only made, the rarest of all models and the most complicated ever made. to racingy given families or racecar drivers. never sold to the public. only 8 have shown up. we are pleased to have this break the record for any rolex timepiece ever sold at auction. >> was that a risk? >> we believe that vintage watches, especially stainless steel, are hot right now. we included brands that aren't popular for the general public. with watches we think the general public should be aware of ranging in price points from $3000 to over $2 million. wonderful. were we were thrilled and delighted. we broke multiple world records and the collecting community appreciated the john or -- the genre. mark: what should i be putting
my millions in? >> a lot of people are concerned about the top end of the art market. you're seeing some of the super expensive artwork is not as bulletproof as it used to be. the prices are much higher in the art market. in see a lot of appreciation watches, but they can be $30,000 to $40,000, it is not the same as the top of the blue-chip market. mark: the auction market is going through a choppy time in our. .- in art you prove there is life in a watch space. some of your competitors were probably not as successful in that auction. watch auction the space. what is the secret to this early success?
>> we were thrilled to have sold $33.5 million this weekend, more than the combined total of the other two auction houses. we believe it resonates with our focus on less is more, scholarship, quantity, client service. we focus on finding the best examples of collectors watches. the community appreciates this focus. >> do people actually wear these washes? >> we find collectors are really passionate. they buy what they love. it is like marrying someone for love, not money. for them it is all about the timepiece, nothing to do with the money. they absolutely wear and enjoy them -- unless they have never been worn. they might put them away. the vast majority, they wear and enjoy them every day.
>> there was at least one pocket watch that did well. in the general vintage watches, pocket watches are not as valuable. why did some pocket watches do well? what is more relevant for society, it is on the wrist. it is the nature of how timepieces are worn. they used to be worn in your suit. greatre a symbol of your space that you can wear your watch in the boardroom and people know that this person is a person of taste. betty: thank you for joining us. in the meantime, lots of news is breaking. houston a craddick leader nancy pelosi saying bipartisan negotiations -- democratic leader net to policy saying bipartisan negotiations have reached a deal on puerto rico. ♪
markets." we will take you from new york to london to frankfurt to paris in the next hour. a developing story, egyptair flight took off from paris headed to cairo and vanished from the sky. we will be monitoring the story for details. betty: the referendum vote to decide if britain stays in the eu is a little less than a month away. oil prices hovering near seven-month highs as crude closes in on $50 a barrel. we will hear from the kuwait oil minister. betty: it is 90 minutes into the trading session in the u.s.